Taxation

Question 1

What are capital losses?

Answer 1

Capital losses arise on the sale of non-depreciable capital property, such as land or investments.

Question 2

What are non-capital losses?

Answer 2

Non-capital losses arise on business income.

Question 3

What can capital losses be used against?

Answer 3

Capital losses are only deductible against capital gains. Can only deduct capital losses up to the capital gains incurred for the period.

Question 4

What happen to capital losses when there is no capital gains in the period or there is excess capital losses?

Answer 4

Capital losses can be carried back 3 years and forward indefinitely .

Question 5

Can you carried back or forward capital losses when there is capital gains in the current year?

Answer 5

No. You must use the capital loss incurred in a year if there are capital gains.

Question 6

What are non-capital losses deductible against?

Answer 6

Non-capital losses can be deducted against any income.

Question 7

Non-capital losses can be carried back __ years and forward ____ years.

Answer 7

Non-capital losses can be carried back 3 years and forward 20 years.

Question 8

Can a portion of non-capital losses/capital losses be carried back and forward?

Answer 8

Yes.

Question 9

How to compute net income for tax purposes?

Answer 9

NI before tax adjusted for additions and deductions.

Question 10

How to compute taxable income?

Answer 10

net income for tax purposes less division c deductions.

Question 11

Do you use NI before tax of NI after tax to compute taxable income?

Answer 11

You can use either, but for NI after tax remember to add back income tax expense.

Question 12

NIFTP - Add or Deduct: Late filing fees and interest penalties

Answer 12

ADD

Question 13

NIFTP - Add or Deduct: Amortization

Answer 13

ADD

Question 14

NIFTP - Add or Deduct: Charitable donations

Answer 14

ADD

Question 15

NIFTP - Add or Deduct: Meals and Entertainments

Answer 15

ADD back 50% only.`

Question 16

NIFTP - Add or Deduct: Golf Club Dues

Answer 16

ADD

Question 17

NIFTP - Add or Deduct: Golf Green Fees

Answer 17

ADD

Question 18

NIFTP - Add or Deduct: Life Insurance

Answer 18

ADD

Question 19

NIFTP - Add or Deduct: Taxable capital gains

Answer 19

ADD

Question 20

NIFTP - Add or Deduct: Warranty Accruals revisit

Answer 20

ADD ending, DEDUCT beginning

Question 21

NIFTP - Add or Deduct: Interest on Lease Liability

Answer 21

ADD

Question 22

NIFTP - Add or Deduct: CCA

Answer 22

DEDUCT

Question 23

NIFTP - Add or Deduct: CEC

Answer 23

DEDUCT

Question 24

NIFTP - Add or Deduct: Capital Dividend

Answer 24

DEDUCT

Question 25

NIFTP - Add or Deduct: Financing Fees

Answer 25

ADD back entire amount and DEDUCT 1/5 of financing fees.

Question 26

NIFTP - Add or Deduct: Lease Payments

Answer 26

DEDUCT

Question 27

What is deductible under Division C Deductions?

Answer 27

1. Charitable Donations | 2. Allowable capital losses from previous years

Question 28

NIFTP - Add or Deduct: Food and Beverage from club

Answer 28

ADD back 50% because it M&E.

Question 29

NIFTP - Add or Deduct: Christmas Dinner

Answer 29

ADD back 50% because it M&E.

Question 30

NIFTP - Add or Deduct: Tickets to sporting events

Answer 30

ADD back 50% because it M&E.

Question 31

How to calculate CCA?

Answer 31

``` Beginning UCC Add: additions (1/2 of addition)* Less: disposals = CCA base x CCA rate = CCA claimed CCA base + 1/2 of addition - CCA claimed = Ending UCC ``` *1/2 rule only applies to some classes not all

Question 32

What is CEC and how to calculate CEC?

Answer 32

CEC = cumulative eligible capital